South Korea becomes VN’s second largest trade partner
South Korea becomes VN’s second largest trade partner
South Korea has surpassed the US, the European Union and ASEAN for the first time to become Viet Nam’s second-largest trade partner, after China.
According to the General Department of Customs, in the first half of this year, trade value between Viet Nam and South Korea reached $29.12 billion, accounting for 14.7 per cent of total national trade value, of which export value from Viet Nam to South Korea stood at $6.57 billion while import value from South Korea to Viet Nam was $22.56 billion.
That import value with strong growth at 51.2 per cent year-on-year made Viet Nam’s trade deficit with South Korea increase to $15.99 billion, higher than its trade deficit with China at $13.72 billion.
The Ministry of Planning and Investment said these figures showed that Viet Nam had promoted imports from South Korea and that country, therefore, became the second largest goods supplier of Viet Nam, after China. Viet Nam mainly imported machines and equipment from South Korea for South Korean investors’ factories to produce export goods in Viet Nam.
Nguyen Duc Thanh, director of the Viet Nam Institute for Economic and Policy Research, said this development and current structure of import and export goods reflected the trend of dependence on trade of some large South Korean enterprises, especially Samsung.
Some $15 billion of the $22.5 billion import value from South Korea to Viet Nam was spent to import machinery, equipment and spare parts; computers, electronic products and their components; and phones of all kinds and components. These products were required for Samsung’s investment projects in Viet Nam.
Economic expert Dinh Tuan Minh said it was a positive development if imports from South Korea consisted mainly of equipment and material for production, however, it was a different story if the imported items were consumption goods.
Tran Toan Thang, head of the World Economic Department at the National Centre for Socio-economic Information and Forecast, said this development was unavoidable.
Viet Nam and South Korea had expected this change in the structure of trade when negotiating the Viet Nam-South Korea Free Trade Agreement. According to the expectation, imports from South Korea would increase and this change would diversify Viet Nam’s import and export markets to avoid dependence on one market.
However, those changes came earlier than expected, Thang said.
Viet Nam must depend on the import of equipment and material for production because the domestic support industry has not developed for the short term, he said. The nation has seen large volumes of import items for the processing of export products.
The important thing was that Viet Nam should depend on countries that will bring more benefits. If it depends on imports from the United States, European Union or OECD with high quality products, Viet Nam will have imported material of high quality and will thus process higher quality export products, Thang said.
In addition, putting a stop to imports was impossible once tariff barriers were lifted according to commitments of free trade agreements signed between Viet Nam and some countries, he said.
The key solution was for other countries to make use of the FTA to export their goods to Viet Nam while Viet Nam would also do the same to promote its exports to those countries, he said.
Meanwhile, Viet Nam should improve further development of its support industry to reduce the import of equipment and material, leading to a trade deficit cut in the future.
Trade figures
According to the General Department of Customs, Viet Nam’s total trade value was $198.2 billion in the first half of this year, up 21.5 per cent year-on-year.
Trade value of foreign-direct-investment (FDI) enterprises reached $129.62 billion, up 23.9 per cent over the same period last year, including export value at $68.97 billion and import value at $60.66 billion.
This value of domestic enterprises reached $68.6 billion, 17.2 per cent higher than the same period of last year, including export value at $28.76 billion and import value at $39.84 billion.
The department said Viet Nam had trade deficit of $2.78 billion in the first half of this year, including $292 million in June.
The trade deficit of the domestic business sector was $11.09 billion while FDI enterprises achieved a trade surplus of $8.31 billion.
Trade value of Viet Nam with its 10 largest markets stood at $176.09 billion in the first half, accounting for 88.8 per cent of the total.
China remained the country’s largest trade partner, with $39.8 billion, accounting for 20.1 per cent of the total.
The US came third with $24.4 billion, accounting for 12.3 per cent, then the European Union with $24.01 billion, or 12.1 per cent, and ASEAN with $23.9 billion, or 12 per cent.
The US continued to be the largest export market of Viet Nam’s goods with value at $19.7 billion, a year-on-year increase of 10 per cent.
